Gas market recap: week ending 1 February 2015

PIRA Energy Group has said that rules are going to be written on long term energy contracts. In the US there was a report of gas withdrawal and in Europe demand grew among lower prices and plentiful supply.

LNG

Many long term contracts need to be signed this year in order to finance future supply.

Sellers options are limited, however more quantitative easing and low risk borrowing keep more players in the game.

Buyers options appear to be limitless.

The distancing of sellers and borrowers is creating uncertainty in the long term balances.

Europe

Due to lower prices and a more competitive position in the fuels market, PIRA has increased its gas demand growth projection for this year.

Increases are led by modest recovery in industrial use and a more competitive position for gas relative to coal.

The addition of higher stock injections, as well as the above, means a relatively positive story on the demand side for gas for the first time since 2010.

The major problem for spot sellers is that contract gas nominations by Russian buyers are going to grow and grow in Q2 and 3.

Oman

Sohar based industries have asked the Omani government to consider the recent doubling of natural gas price in a phased manner over a fiver year period.

The government doubled natural gas prices with effect from this month and an annual increase of 3% thereafter.

15 major consumers of natural gas in Sohar’s industrial are affected by the increase.